Baker Hughes Company (BKR) heads into its fourth-quarter earnings report on January 25, 2025, with some serious tailwinds behind its Industrial & Energy Technology segment. And if JP Morgan analyst Arun Jayaram is right, the company's earnings call will spend plenty of time celebrating just how well things are going in that division.

Jayaram maintains an Overweight rating on Baker Hughes with a price target of $53, and his analysis paints a picture of a company hitting its stride right when energy infrastructure demand is heating up. The focus? Two key segments that tell very different but equally important stories about where Baker Hughes stands.

Energy Tech Momentum Building

The Industrial & Energy Technology division (IET) is where the real excitement lives. Jayaram expects inbound IET orders hit $3.6 billion for the quarter alone, pushing full-year orders to $14.5 billion. That's right at the top of the company's guidance range of $13.5 billion to $14.5 billion, which is exactly where you want to be when you're making predictions.

What's driving this? A combination of factors, including improvements in the aero-derivative supply chain that should boost higher-margin Gas Tech Services revenues. The analyst sees IET revenue reaching $3.47 billion with EBITDA margins of 19.9%, just above guidance of $3.45 billion and 19.7%. That translates to IET EBITDA of $692 million, coming in about 1.8% above the guided midpoint of $680 million.

Beyond the numbers, Jayaram expects management to highlight Baker Hughes' broad exposure to surging power generation demand. And yes, that includes but goes well beyond the company's NovaLT turbines for data centers, which have been getting plenty of attention lately as AI infrastructure buildout accelerates.

Oilfield Services Holding Steady

Meanwhile, the Oilfield Services & Equipment segment (OFSE) is delivering what Jayaram calls "a fairly steady result." It's not the star of the show, but steady works. The analyst points to U.S. Gulf activity supporting North American performance, though international markets face some margin pressure from foreign exchange headwinds and other factors.

Jayaram projects OFSE EBITDA of $649 million versus guidance of $650 million, essentially right on target. Add it all together, and you get total fourth-quarter EBITDA of $1.266 billion, edging above the Street consensus of $1.259 billion, with free cash flow projected at $756 million.

The analyst also expects the call to highlight key Middle East contract wins during the fourth quarter, which should help tell the resilience story in OFSE.

Looking Ahead to 2026

For 2026, things get a bit more complicated because the guidance incorporates recent M&A activity but excludes the GTLS merger. Jayaram estimates IET revenue of $13.25 billion with $2.67 billion EBITDA (20.2% margin), while OFSE revenue is expected down 6.9% year-over-year with an 18% EBITDA margin. His total EBITDA estimate comes to $4.82 billion versus the Street's $4.88 billion.

Baker Hughes shares traded down 0.63% at $49.07 on Wednesday.